Gully erosion and collapse fully developed in Yuanmou Dry-Hot Valley area. The development of gullying and the occurrence of collapse are interdependent and mutually promotive. Their relationships are studied based on a general survey of the gullying development stage and collapse type. Results show that gullying development process has the four stages: shallow gully stage, gully stage, gulch stage and valley stage in Yuanmou Dry-Hot Valley area. Generally, there is no collapse occurrence in shallow gully stage. The falling collapse of gully head promotes the gully head advance in gully stage. The sliding collapse of gully sidewall accelerates the gully bank extension in gulch stage. The exfoliation in the lower soil column forms the condition for the toppling collapse of soil column in valley stage when the gully is gradually razed by the collapse of soil column. By analyzing the affecting factors of gullying development and collapse occurrence, it can be concluded that the three aspects, including graded positive sedimentary cycle of lower sand and upper clay from coarse to fine in the Yuanmou Formation, the special soil body structure, and the dry-hot climate and distinct wet-dry seasons, are the basic causes of the gullying development and the occurrence of different collapse types.